Do you want to find out what your customers really want to buy and how much they are willing to pay?
Product feature optimization is the process where the best combination of product or service features and price is determined that will drive sales, market share and profitability.
Potential customers consider a wide range of factors when selecting a product and different people will prioritize these considerations differently. So how is any company to figure out what to do?
The Apollo Consulting Group suggests using Conjoint analysis to optimize features for a new product or service. Conjoint analysis was specifically developed to solve this kind of problem. Conjoint analysis is also called Discrete Choice Estimation or Stated Preference Research.
Conjoint analysis is a four step process:
Survey Design – A survey is designed to be offered to potential customers. The survey offers a series of questions. Each question asks the potential customer to choose from several sets of product features including price and indicate which one would be preferred.
Survey Offering – A set of target customers is identified and then the survey is provided to potential customers. The answers are returned.
Analysis – The survey results are then analyzed using advanced statistical techniques. The results include the importance of individual features to the customer’s preferences. These are called part-worths or attribute level utilities. It also reveals the price elasticity of demand.
Predictive Modeling – The part-worths are then incorporated into a model which is used to predict which product alternatives respondents would choose within competitive scenarios.